S.Korea raises key rate on inflation concerns

South Korea's central bank has raised its key interest rate for the first time in two years and nine months, citing inflation concerns.

The Bank of Korea on Thursday hiked the base rate by 0.25 percentage point to 0.75 percent. It cut the rate twice last year to stimulate the economy amid the coronavirus pandemic.

Bank of Korea Governor Lee Ju-yeol told a news conference that the rate hike is the bank's first step toward normalization of its monetary policy.

He said a spike in new cases is hurting consumption, but not enough to stall the ongoing economic recovery.

The central bank says growing worries on inflation are behind the tightening.

It also notes that surging property prices are driving up household debt.

South Korean media are reporting a common view that the bank feels the time is right to deal with the side effects of record-low interest rates.